Direct Pay: Innovation or Failure?

Published on 1 April 2019

Summary

Direct Pay – where parents manage payments directly between each other – is a central pillar of the new statutory child maintenance system, designed to minimise state involvement in arrangements to encourage collaborative parental relationships and reduce spending.

Once a parent applies to the new Child Maintenance Service (CMS), and pays their application fee, they receive a calculation. Then their case can go down one of two paths: the first is ‘Direct Pay’, where parents manage payments between themselves; the second is ‘Collect and Pay’, for cases where maintenance goes unpaid and the CMS must step in to collect and manage payments.

This interface between these two paths is a fundamental part of the reformed system. Collect and Pay charges are intended to encourage Direct Pay compliance– the principle being that a paying parent can only avoid Collect and Pay charges if maintenance is paid in full and on time, and they remain in the Direct Pay service where there are no ongoing fees.

But despite its central role in the new Child Maintenance Service (CMS), there is very little information on effectiveness of Direct Pay. The DWP does not track whether payments are made, meaning it cannot report on compliance in nearly seven in ten (66 per cent) of its cases.

This research builds on these concerns and early worries raised by Gingerbread to help fill an evidence gap on a major part of the new maintenance system, using a series of in-depth interviews with single parents.

Key findings

Our evidence suggests there are a number of key failings within the Direct Pay system.

Collect & Pay collection charges, intended to nudge people towards compliant Direct Pay arrangements, are not sufficient to deter paying parents from not paying in full and on time. And on collaboration between parents, the evidence suggests there is at best no effect.

Not only were charges failing to ‘nudge’ towards compliance, but there was also a common feeling that charges for receiving parents were unfair – a double penalty, coming on top of the other parent’s non-compliance.

Parents also shared their frustrations with an ineffective Direct Pay system, where arrangements are prolonged by unclear thresholds for enforcement; and there is inconsistent follow-up from caseworkers and poor communication. The hands-off approach, compounded by poor administration, places the burden of responsibility for pushing for Direct Pay enforcement onto receiving parents – this can make it harder to see progress, particularly where parents are reluctant to instigate enforcement in case they jeopardise their relationship with the paying parent.

Key recommendations

It cannot be right that the DWP has no idea about the performance of nearly seven in ten of its cases. The department is arguably failing in its duty to help uphold children’s statutory right to maintenance from their parents. The government must act to ensure this new model is fit for purpose and maintenance flows for children:

  • Scrap Collect & Pay charges for receiving parents: There is no evidence that this encourages payment or collaboration between parents; in many cases it simply means that children are paying a penalty.
  • Monitor Direct Pay compliance: Use the online portal or other systems to monitor payment and trigger follow-up action to strengthen case management
  • Introduce transparent service standards: Clearer thresholds for enforcement (including persistently late or fluctuating payments) and performance measures are needed, supported by rigorous training for staff.

Nudging parents towards collaboration and compliance is simply not working. Without addressing the void this leaves, children will continue to lose out on the maintenance they deserve.